The FTC is possibly preparing to launch an antitrust lawsuit against Facebook as per certain reports. In fact, for almost a year, the US Federal Trade Commission has been investigating Facebook for an alleged violation of US competition laws.
An anonymous source, familiar with these proceedings, has stated that the FTC could launch the antitrust lawsuit as early as this year’s end. However, the source did confirm that a final decision on this matter is still pending.
Major technology giants, including Alphabet Inc.’s Google, are presently under the FTC’s scanner. The US competition enforcement agency is primarily concerned that competition laws were flouted by these companies.
In fact, the FTC is investigating whether Facebook abused its dominant market position to curb competition. Also, the US Justice Department is preparing to sue Google shortly.
Do note that as part of any standard investigation, the FTC prepares for a lawsuit. However, a majority of the FTC’s five commissioners will need to vote in favor of filing this lawsuit. The FTC cannot file a lawsuit if the majority of the five commissioners disagree.
The FTC started the antitrust investigation against Facebook in June 2019.
In June 2019, FTC fined Facebook to a tune of USD 5 billion for violating user privacy. Almost simultaneously, the FTC had launched this investigation into Facebook’s acquisitions.
The investigation is focusing on Facebook’s acquisitions of WhatsApp and Instagram. The probe is trying to identify whether Facebook violated antitrust laws in these acquisitions.
Both, WhatsApp and Instagram, were potential major rivals to Facebook in the social media space. The FTC believes that Facebook abused its dominant market position to acquire WhatsApp and Instagram instead.
The FTC is not alone in taking this stand. As a matter of fact, in July this year, a House committee accused Facebook of eliminating smaller rival companies. The committee argued that Facebook would simply acquire any smaller firm which could challenge its market position.
The committee alleged that Facebook CEO, Mark Zuckerberg was involved in formulating this strategy. These documents allege that Zuckerberg internally discussed that Instagram could be very disruptive to Facebook.
In its defense, Facebook countered saying that Instagram succeeded after Facebook’s investments in the company in 2012. Facebook also argued that there was no guarantee that Instagram would become as big a hit, at the time of the acquisition.
Incidentally, the FTC had initially cleared both these acquisitions. However, the enforcement agency has powers to rescind its clearance. The FTC would need to go to court against its original clearance. The competition law enforcer would do this only in cases where antitrust laws were flouted.
The ongoing FTC investigation is digging into past acquisitions by Facebook as well as asking questions related to app development and platform management.